Which of the Following Is an Appropriate Use of a Fund

question 32

Multiple Choice

Which of the following is an appropriate use of a fund balance restriction?

• A) To report the amount of capital assets acquired during the year.
• B) To indicate that the finance director is setting aside a substantial amount of resources for a special project.
• C) To report the expected costs of orders outstanding at year end that are to be filled in the next fiscal year.
• D) To report amounts that can only be used for specific purposes due to debt covenant constraints.

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Definitions:

Financial and Profit Model

A theoretical construct that represents the economic operations of a business, detailing how revenue is generated, costs are incurred, and profits are made.

Situation Assessment

The process of evaluating the current state of an environment or situation to inform decision-making and strategy formulation.

Impact/Likelihood Matrix

A tool used in risk management to evaluate and prioritize risks based on their potential impact and the likelihood of occurrence.

Assess External

The process of evaluating factors outside of an organization that could impact its performance, including market trends, economic conditions, and competitive landscape.